Date: April 21, 2020
First published in Straits Times on 21 April 2020
During this difficult time, it may be necessary to sacrifice short-term needs to ensure long-term corporate survival
Market regulators have recently stepped up to the plate with timely measures to ease financial pressure on listed companies.
This comes as the coronavirus pandemic is affecting wide swathes of the economy worldwide. The Singapore Government has, for instance, rolled out unprecedented fiscal support in less than two months, amounting to $60 billion, to help businesses and households tackle the Covid-19 crisis.
The Singapore Exchange Regulation (SGX RegCo) said earlier this month that it will suspend entry of loss-making companies into its watch-list, while giving expedited clearance to fund-raising efforts by mainboard companies.
It will also give companies more time to hold their annual general meetings (AGMs). An automatic 60-day extension will be granted to all issuers with their financial year ending on or before March 31 this year.
All companies, including those with their principal place of business in China or which have significant business operations in China, must issue their annual reports to shareholders and the SGX at least 14 days before the date of the AGM. Also, non-China-based companies whose financial year ended on Dec 31 last year had to issue their annual report by last Wednesday.
While many retail shareholders are used to attending AGMs in person, the circuit breaker rules in Singapore mean that it will no longer be possible to do so, at least for now.
Nevertheless, companies would still have to proceed with their business and are encouraged to conduct their AGMs via webcast so that shareholders can stay updated on their investments.
To help companies with managing costs during the Covid-19 pandemic, SGX has established a $5 million package to support Singapore-listed companies as well as SGX employees and contract staff, in particular front-line staff such as cleaning and security crew. Part of the funds also go towards national healthcare support programmes, such as the Courage Fund that is facilitated by the National Council of Social Service and its fund-raising arm, the Community Chest.
Concerns over the long-term social and economic impact of the coronavirus have jolted global financial markets in recent weeks.
This effort by SGX is thus noteworthy and in that it has been taking the early lead to ensure that companies actively engage their shareholders and provide them with the help necessary to do so during these challenging times.
The Securities Investors Association Singapore (Sias) supports such initiatives, especially those that allow companies affected by the pandemic more room to manoeuvre in terms of fund raising and to have more time to organise virtual AGMs.
Sias also recognises that virtual AGMs will pose unique challenges for all parties but believes that such meetings should be able to proceed smoothly, provided certain procedures are followed. These are outlined in Sias’ guide to virtual AGMs that was issued last month.
First, all instructions on how to participate in the general meeting should be made through an announcement on SGXNet as well as the company’s own website.
These should include arrangements for shareholders to ask questions, as well as video and webcast facilitation of the meeting, such that shareholders can attend remotely.
Second, shareholders who opt to follow company AGM webcasts should read the annual reports and send in their relevant questions to the company at least one week ahead of the AGM.
They should also stay updated via the companies’ websites or SGXNet announcements. This way, the meeting’s agenda will remain relevant and not stray too far away from essential matters.
Third, shareholders are also advised to familiarise themselves with Sias’ guide to attending AGMs, which even though was formulated with physical meetings in mind, applies equally to meetings in the virtual realm.
In a nutshell, when attending any company-organised meeting as a shareholder, it is important to observe certain protocols, such as asking one question at a time, sticking to the relevant matters and demonstrating proper courtesy and respect to the board and other shareholders.
Fourth, shareholders should continue exercising their voting rights on corporate elections and other resolutions. They are advised to submit proxy forms to appoint the chairman of the general meeting, who will act as proxy during the meeting and direct their votes accordingly.
However, shareholders need to take note of the submission deadlines. In particular, Central Provident Fund and Supplementary Retirement Scheme investors who wish to appoint the chairman as their proxy should approach their respective agent banks or operators to submit their votes at least seven working days before the general meetings.
Fifth, shareholders should familiarise themselves with Sias’ three questions that are sent to companies to answer at the AGM. These questions relate to each company’s governance, financials and strategy, and companies are encouraged to post their responses on SGXNet and their websites so that all their shareholders will be equipped to properly understand the company.
The list of companies covered and the questions Sias would like them to answer can be found on Sias’ website.
Sixth, and perhaps most pertinently from the viewpoint of most shareholders, should be understanding the cash needs of companies that propose either to reduce their dividends or suspend any payment altogether.
The pandemic has severely disrupted supply chains and brought worldwide commerce to a virtual standstill, and companies will have to preserve as much of their resources as possible to stay solvent.
Shareholders are therefore advised to bear this in mind when the issue of dividends arises for discussion at the AGM.
It may be necessary to sacrifice short-term needs to ensure long-term corporate survival.
The Government and market regulators are playing their part in trying to keep the business sector afloat, and shareholders should consider doing the same.
Notwithstanding, companies that can well afford to pay dividends should continue to do so.
• The writer is David Gerald, founder, president and chief executive of the Securities Investors Association Singapore.